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> GDP growth is "more money" This is not true. A measure of the amount of money in the economy, as tracked by the Fed, has risen around 50% since 2008 [0] whil
by seizethecheese 11y ago
> GDP growth is "more money"
This is not true. A measure of the amount of money in the economy, as tracked by the Fed, has risen around 50% since 2008 [0] while GDP has only grown a few percent per year.
[0]: https://research.stlouisfed.org/fred2/series/M2 https://research.stlouisfed.org/fred2/series/M2
- branchless 11y agook it's also velocity, but in general once a boom starts and the taps come on it's both. Now I agree they are pushing on a string. If velocity is held as a constant then creating more => "growth".
- dredmorbius 11y agoWhile it's true that money supply's grown and GDP hasn't by nearly as much, that's not the correct response -- OP mis-defined GDP.
- branchless 11y agoI went on to qualify that I'm assuming velocity holds constant. I really think GDP is a terrible measure. We need something that reflects the actual amount of "good stuff" getting done, not the amount of fiat created by banks to ramp the same pile of bricks.
- dredmorbius 11y agoWhile we're agreed on the deficiencies of GDP, the original issue was how economists define growth -- and, well, that's how, and is what Gordon's book addresses. Mismeasures notwithstanding, to a first approximation, GDP likely works fairly well. Not that it's not the fiat created by banks, but the turnover (revenues) generated in the process which would inflate GDP. Something I've been meaning to look into -- and which will likely upset a maths friend of mine on G+ -- is whether financial sector activity really ought be counted as productive. Much of it I suspect isn't.
- branchless 11y agoThat's my whole point. Loads of money is created for lending against land without a single brick being placed as banks force people to pledge all their future labour in exchange for the temerity to exist.